Huntington National Bank 2005 Annual Report Download - page 50

MANAGEMENT’S DISCUSSION AND ANALYSIS HUNTINGTON BANCSHARES INCORPORATED
Non-Interest Expense
(This section should be read in conjunction with Significant Factors 1, 5, and 7.)
Non-interest expense for the three years ended December 31, 2005 was as follows:
Table 8 — Non-Interest Expense
Year Ended December 31,
Change from 2004 Change from 2003
(in thousands of dollars) 2005 Amount % 2004 Amount % 2003
Salaries $ 379,589 $ 3,321 0.9% $ 376,268 $ 14,826 4.1% $ 361,442
Benefits 102,069 (7,469) (6.8) 109,538 23,717 27.6 85,821
Personnel costs 481,658 (4,148) (0.9) 485,806 38,543 8.6 447,263
Net occupancy 71,092 (4,849) (6.4) 75,941 13,460 21.5 62,481
Outside data processing and other services 74,638 2,523 3.5 72,115 5,997 9.1 66,118
Equipment 63,124 (218) (0.3) 63,342 (2,579) (3.9) 65,921
Professional services 34,569 (2,307) (6.3) 36,876 (5,572) (13.1) 42,448
Marketing 28,077 1,588 6.0 26,489 (1,001) (3.6) 27,490
Telecommunications 18,648 (1,139) (5.8) 19,787 (2,192) (10.0) 21,979
Printing and supplies 12,573 110 0.9 12,463 (546) (4.2) 13,009
Amortization of intangibles 829 12 1.5 817 1 0.1 816
Other 76,236 (17,045) (18.3) 93,281 12,501 15.5 80,780
Sub-total before operating lease expense 861,444 (25,473) (2.9) 886,917 58,612 7.1 828,305
Operating lease expense 108,376 (128,102) (54.2) 236,478 (156,792) (39.9) 393,270
Sub-total including operating lease expense 969,820 (153,575) (13.7) 1,123,395 (98,180) (8.0) 1,221,575
Restructuring reserve releases — 1,151 N.M. (1,151) 5,515 (82.7) (6,666)
Loss on early extinguishment of debt ——— — (15,250) N.M. 15,250
Total non-interest expense $ 969,820 $ (152,424) (13.6)% $1,122,244 $(107,915) (8.8)% $1,230,159
N.M., not a meaningful value.
2005 versus 2004 Performance
Non-interest expense decreased $152.4 million, or 14%, from 2004 with $128.1 million of the decline reflecting the decrease in
operating lease expense. Of the remaining $24.3 million decline, the primary drivers were:
– $17.0 million, or 18%, decrease in other expense, reflecting $7.5 million of SEC/regulatory-related expenses in 2004,
$5.8 million of costs related to investments in partnerships generating tax benefits in the year-ago period, and lower
litigation related expense accruals and lower insurance costs in the current period.
– $4.8 million, or 6%, decline in net occupancy expense, as 2004 included a $7.8 million loss caused by property lease
impairments, partially offset by lower rental income and higher depreciation expense in 2005.
– $4.1 million, or 1%, decline in personnel costs, mainly due to lower commission and benefit expense, partially offset by
higher salaries and severance.
– $2.3 million, or 6%, decline in professional services, reflecting lower SEC/regulatory-related expense.
Partially offset by:
– $2.5 million, or 3%, increase in outside data processing and other services, reflecting mostly higher debit card processing
expense and system conversion expense.
– $1.6 million, or 6%, increase in marketing expense.
– $1.2 million increase in the restructuring reserve charges line item, reflecting a restructuring reserve release in 2004 with
no release in 2005.
SEC-related expenses and accruals, as well as expenses related to Unizan integration planning and systems conversions,
contributed to the change in expense from 2004. Specifically, SEC/regulatory-related expenses and accruals totaled $3.7 million in
2005, down from $13.6 million in 2004. These expenses and accruals impacted the professional services and other expense
categories. Unizan integration planning and systems conversion expenses totaled $0.7 million in 2005, down from $3.6 million in
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